It was labelled a “deliberate design feature of our economic architecture” by Mathias Cormann, a statement which caused new cabinet minister Linda Reynolds verbal whiplash when she mistook it for a Bill Shorten quote, earlier this month.
But low wage growth is shaping up as a key issue of the election, with more than 100 labour policy experts and economists weighing in on the debate over what they call the “growing and legitimate concern in Australia over the erosion of real living standards”.
With Labor considering a living wage, over a minimum wage, which would see new essentials such as the internet and mobile phones taken into account by the Fair Work Commission when setting what Australia’s lowest paid workers should earn, wage growth has become one of the slow-burn issues ahead of the May poll.
Scott Morrison has warned Labor’s strategy will lead to job losses, and said wage growth will result from a “strong economy”.
But in an open letter published on Tuesday, 124 leading economic, legal and policy experts have called for “proactive measures” to accelerate wage growth.
“Nominal wages have been growing at only about 2% per year since 2015. That’s barely half the traditional pace of growth experienced over the preceding 50 years – and the slowest sustained rate of wage growth since the end of the second world war,” the letter says.
“Nominal wages have barely kept up with consumer prices; for many Australian workers, the real purchasing power of their incomes has declined. And despite official assurances that an acceleration of wage growth is imminent, there is no clear indication of any significant or lasting rebound.”
The letter, circulated by Prof Andrew Stewart, Dr Jim Stanford and Dr Tess Hardy, who co-edited a collection of research essays on the topic, The Wages Crisis in Australia, is the latest volley in the debate, which is also seeing both the government and Labor pressured to commit to raising the Newstart allowance.
“This is not a problem that is going to fix itself”, added Stewart, the John Bray Professor of Law, Adelaide Law School. “We need to see a policy response from governments at all levels – and an acceptance that lifting wage growth can help the economy, not harm it.”
The letter proposes measures to raise and better enforce minimum wages, strengthen collective bargaining, relax wage caps on public sector workers, tackle pay inequities, and constrain the ability of businesses to avoid or outsource normal employment responsibilities.
The Australian Council of Social Services chief executive, Cassandra Goldie, said the Newstart daily rate was equivalent to just two hours on the minimum wage. A single person receives just $275 a week on Newstart.
“We need government and business to both play their part for people on the lowest 40% of incomes – both people relying on income support and wage earners, who in reality are often the same people at different stages of life, sometimes week to week,” she said.
But proponents of raising the wages of Australia’s lowest paid face pushback from a sceptical business community, which has questioned its affordability.
The Australian Industry Group has called for just a 2% raise to the minimum wage, adding just under $15 a week to the $720 or so rate, in its submission to the Fair Work Commission, arguing “now is not the time for risky movements in minimum wages”.
